Financial institutions ("FIs"), such as banks, have conventionally handled the transfer and presentment of negotiable instruments for payment in a manual, paper-based fashion. At specified times each day, "sending" FIs sorted all negotiable instruments presented to them by depositors and other correspondent FIs into bundles--each bundle containing the negotiable instruments for the particular FIs on which they are drawn.
The sorted bundles were then segregated into batches of negotiable instruments according to an assigned American Banking Association ("ABA") routing/transit number ("R/T") printed on the face of the negotiable instrument. These batches were then aggregated for shipment to the paying FI. A detailed listing and a cover letter (collectively, a "cash letter") were attached to each such shipment. The cash letters presented the dollar amount of all negotiable instruments within the batch and summarized its accumulated dollar amount--the summary often included the names of the paying and sending FIs, the preassigned R/T associated with each of the same, the number of negotiable instruments in the batch and the total dollar amount of all of the negotiable instruments in the batch.
When the paying FI received the cash letter, it verified its contents (i.e., negotiable instrument amounts balanced with the totals contained on the cover letter), a process commonly referred to as "reconciliation." If a balancing discrepancy existed (e.g., missing or extra negotiable instrument, amount or arithmetic error, etc.), the condition was documented and notification of the error was slated for the sending bank. Other conventional check processing and posting functions, commonly referred to as "Demand Deposit Accounting" ("DDA"), were then performed to determine whether any of the accounts on which the negotiable instruments were drawn were restricted (e.g., closed, dormant, stop payment, account holder deceased, etc.). If a particular account was not restricted, the paying FI determined whether there was enough money in the account (i.e., sufficient funds) to cover payment of a negotiable instrument drawn thereon. The paying FI, in response to these determinations, either accepted or rejected payment of the negotiable instrument, slating the reconciled negotiable instrument for return. The paying FI notified the sending FI of any balancing discrepancies, any negotiable instruments to be returned unpaid, or the like. The return to the sending FI was again accomplished by physical transportation of the negotiable instruments.
It became apparent as negotiable instrument volume (particularly, check volume) increased that conventional negotiable instrument processing methods required automation. To facilitate this automation, the ABA introduced a method of printing information on each negotiable instrument, commonly referred to as Magnetic Ink Character Reconciliation ("MICR"). The MICR method, which today uses a font known as "E13B," is used to properly route and process each received negotiable instrument. The contents of the MICR line are specified in various American National Standards Institute ("ANSI") publications.
Typically, there are six MICR fields defined: (1) dollar amount, (2) account number, (3) R/T number, (4) process control or serial number, (5) auxiliary on-us or serial number, and (6) external process code. The incorporation of MICR information on negotiable instruments improved the clearing process in terms of speed and flexibility--the cash letter process was automated, although the reconciliation process remained manual.
Automation also introduced reconciliation discrepancies such as (1) differences in processing equipment and software used by the various FIs, (2) a lack of quality control standards for MICR printing, and (3) exceptions caused by environmental conditions. To address some of these problems, and to further speed the clearing process, processing systems and, later, processing system networks (collectively, "processing environments") were integrated therein allowing extracted MICR information to be used to create electronic payment transactions that are communicated between sending FIs and paying FIs.
Today, the electronic clearing process includes electronic check presentment ("ECP"), electronic data exchange ("EDE"), automated clearing houses ("ACH"), branch item capture ("BIC") and check truncation. Each of these exemplary electronic sub-processes rely on the ability for one or more FIs to extract MICR information or other data from negotiable instruments, to convert the data to an electronic transaction, to apply the electronic transaction to an account for debiting purposes and, subsequently, to match the paper negotiable instrument to the electronic transaction for reconciliation purposes.
The types of processing environments employed in an FI's ECP process typically vary in functionality. For example, the circuitry used to read the information contained within a given MICR line varies with the type of equipment and the techniques used to recognize the magnetic and/or optical representation of the individual MICR symbols and numbers. To convert the paper negotiable instrument MICR information to an electronic item, the MICR information is typically scanned and formatted to conform to one of several standard electronic transaction formats. The electronic item is then grouped with other electronic items, similar to the cash letter process described hereinabove, and transmitted via data transmission means, possibly through intermediary FIs, such as Federal Reserve Banks ("FRBs"), to a paying FI. The paper negotiable instrument follows thereafter, usually traversing each of the same FIs through which the electronic item passed. Each FI matches the received paper negotiable instrument with the previously processed electronic transaction for reconciliation. Reconciliation verifies that the electronic item was received, that there was a corresponding paper negotiable instrument and that the MICR contents of the paper negotiable instrument were correctly extracted and processed.
The matching process is often unduly complicated by factors such as variability in the placement of the contents of the MICR line information from FI to FI, the condition and quality of the paper instrument (e.g., torn, folded, dog-eared, etc.), the condition of the scanning equipment from FI to FI, etc. In point of fact, the paper instrument and the corresponding electronic item often include the same information, but due to variability caused by one or more of the foregoing factors, the paper instrument is incorrectly identified as a mismatch causing the electronic item to be incorrectly processed. This introduces an unnecessary, and often significant, latency into the check clearing process. Conventional procedures for matching an electronic item with a corresponding paper instrument fail to rationalize the contents of the MICR line as scanned by each FI. These procedures also fail to provide an accurate method of comparing and determining match criteria of a negotiable instrument's MICR line as read and captured by one FI's equipment and subsequently read and captured by another FI's equipment.
To address these deficiencies, the invention described in U.S. Pat. No. 5,687,579 ("'579 Patent"), for the "Rule-Based Circuit, Method and System for Preforming Item Level Reconciliation," which is incorporated herein by reference for all purposes, introduced systems and methods for reducing the amount of labor intensive, manual processes needed to perform reconciliation of electronically generated financial transactions. The '579 Patent provided a reconciling circuit, and method of operation, in electronic processing of negotiable instrument's, for reconciling first and second databases, wherein the first database contained first item data arranged in records and fields, and the second database contained second item data arranged in records and fields. The records of the first database are compared with the records of the second database, and a designation is placed on mismatching ones of the records of the first and second databases. At least one field mismatch tolerance rule is also provided that indicates, by field, an allowed extent of mismatch. The field mismatch tolerance rule is applied to the fields of the mismatching ones of the records of the first and second databases and the designation is removed when the fields of the mismatching ones of the records of the first and second databases fall within the field mismatch tolerance rule.
The systems and methods of the '579 Patent measure the criticality of certain fields within a check's MICR line, as well as the MICR line fields themselves, for determining the quality of the captured data from a negotiable instrument's MICR line, for assigning variable confidence level factors to the results of the physical, or paper, negotiable instrument and electronic item comparison, and for determining the overall accuracy of the physical to electronic match.
Comparison of records or items of multiple databases can substantially occupy, and even monopolize, the resources of the processing environments supporting ECP of one or more FIs. To take a step back, databases are generally associated with a database manager ("DBM"), which is a program, that performs a range of tasks on the databases (the range varying based on the intended use of the database and the sophistication of the DBM). A fundamental problem with DBMs is their cost, which is often quantified in terms of processing overhead. For example, programs not only must share processing environment resources with the DBM, but they must also interact with the DBM to access the database, often waiting in line for other programs to complete their transaction.
Conventional DBMs tend to have very complicated schemes and restrictive structures that constrain the expressiveness of state-of-the-art application and system tools. Traditionally, ECP databases have been stored in non-volatile (e.g., disk) memory, while DBMs and software applications have resided, at least in pertinent part, in volatile (e.g., main) memory. Due largely to the sheer number of negotiable instruments presented today, ECP applications require high performance access to data with response time requirements on the order of tens of milliseconds, or less. Traditional non-volatile (disk) memory databases are largely incapable of meeting such high performance needs, often due to the latency of accessing data that is non-volatile memory-resident.
Therefore, what is needed in the art is a transparent and non-intrusive manner of enabling ECP applications to access select data of a database, within the aforementioned time requirements, and allowing the efficient and timely processing of large numbers of negotiable instruments.